Viral success is the dream of just about every small business these days. Whether the business model is a website where users can upload videos for free, or a special app that gives people the ability to share the cost of a rental car, the idea of overnight success is just plain intoxicating.
And the advent of the sharing economy hasn’t helped. The successes of “collaborative consumption” companies have been staggering. Seven-year-old Uber, which these days is leading a popular movement to block more California regulation of car-sharing services, has been valued at $17 billion. Six-year-old accommodations facilitator Airbnb last April successfully closed talks with TPG for additional capital that raised its value to $10 billion, reportedly exceeding the value of Hyatt Hotels. Smaller startups like FlightCar, MonkeyParking and a variety of crowdsharing models, while not as spectacular in their commercial success have also seen the glory of overnight stardom that comes from offering something truly disruptive and unexpectedly cool.
And then there are those startups that have also experienced the challenges that come with overnight growth; challenges that in some cases have pitted them against local bylaws and attracted the attention of government regulators. In some cases, customer data became subject to court subpoenas. In more than one case, the very legality of the company’s right to operate became a contentious issue that put the privacy of its users at potential risk.Click to continue reading »